Freedom and growth improve life for everyone. Evidence and the current news.

Saturday, October 15, 2011

ObamaCare is sent into the red by canceling long-term care part

The Obama administration faced the numbers on a provision of ObamaCare and killed it - a long-term care provision called CLASS. But it was one of the budget tricks that made ObamaCare "lower the deficit." Not that they could say that with a straight face.

CLASS never made any sense. Obama's person in charge of estimating such things, Richard Foster, head of long-range economic forecasts for Medicare, warned in 2009 - before ObamaCare passed - that CLASS would never work out as planned.

So Secretary of HHS Kathleen Sebelius announced Friday that CLASS was canceled.

But it started collecting premiums now and didn't pay out for five years. That made it add $80 billion of black ink to ObamaCare of the next 10 years. ObamaCare is now more obviously than ever a huge drain on the US budget for years into the future.

... After months insisting that could be fixed, Health and Human Services Secretary Kathleen Sebelius finally acknowledged Friday she doesn't see how.

"Despite our best analytical efforts, I do not see a viable path forward for CLASS implementation at this time," Sebelius said in a letter to congressional leaders.

The law required the administration to certify that CLASS would remain financially solvent for 75 years before it could be put into place. [Wow! There was one piece of common sense hidden in the ObamaCare 2,000-page bill.]

But officials said they discovered they could not make CLASS both affordable and financially solvent while keeping it a voluntary program open to virtually all workers, as the law also required.

Monthly premiums would have ranged from $235 to $391, even as high as $3,000 under some scenarios, the administration said. At those prices, healthy people were unlikely to sign up. Suggested changes aimed at discouraging enrollment by people in poor health could have opened the program to court challenges, officials said.

"If healthy purchasers are not attracted ... then premiums will increase, which will make it even more unattractive to purchasers who could also obtain policies in the private market," Kathy Greenlee, the lead official on CLASS, said in a memo to Sebelius. That "would cause the program to quickly collapse."

That's the same conclusion a top government expert reached in 2009. Nearly a year before the health care law passed, Richard Foster, head of long-range economic forecasts for Medicare, warned administration and congressional officials that CLASS would be unworkable. His warnings were disregarded, as President Barack Obama declared his support for adding the long-term care plan to his health care bill.

The demise of CLASS immediately touched off speculation about its impact on the federal budget. Although no premiums are likely to be collected, the program still counts as reducing the federal deficit by about $80 billion over the next 10 years. That's because of a rule that would have required workers to pay in for at least five years before they could collect any benefits. ...

"The CLASS Act was a budget gimmick that might enhance the numbers on a Washington bureaucrat's spreadsheet but was destined to fail in the real world," said Senate Republican leader Mitch McConnell of Kentucky. ...